@ Braganza

Read the article from Vivek Jain on the front page. The Club's understanding on GST ISSUE is contrary to your views and explanations. Sl dont weave dreams.

I share Mr. Braganza's views completely. However I have a question for him. Each pool is made up of punters punching tickets and the pool is distributed to the winning punter(s). According to me this is a clear case of mutuality of interest. Thus payment of the winning tickets should not attract income tax! The concept being one cannot make profit out of himself. I never thought of it before because I cant remember when I used the tote. However, the commission deducted from the collection is taxable both from the IT side as well as GST.

The second question is that while the Licence fee charged to the bookmaker is taxable for the club both again for IT & GST. However the proposed bill permits a set off for the GST paid on other services for the club. I am confused here. The bookmaker charges 10% for each bet laid with him. What service does he render to the punter--- just collecting bets is not a service!Its like going to a bank and depositing money--- is the bank rendering a service? Infact I am rendering a service to the bank!The commission that the bookie makes is taxable undoubtedly but it is difficult to imagine he makes a full disclosure to the Income Tax authorities.

I doubt that racing will be affected.It will be business as usual. Let us move forward and have fun.

Cheers

@ Braganza

You explained the deduction on Club's point of view.
I have one question. We are talking about BETTING TAX.
The Clubs are not Betting. The Punters are betting. Do you think the Government spare the Punters. Punters punt many a times in a day in all races on a pari mutuel basis. Many a punters are winning also. If the Govt. deduct 28% tax only on Club's Commission then that is a win-win situation for punters. In that case the tax amount payable to the government may reduce from the present level. Do you think the state governments will accept it. No way. States will definitely interpret the tax rules to suit their benefit. Like IT Bangalore have their own interpretation on TDS from Winning Tickets.

For example:
1. BTC and IT Bangalore do not allow Rs 10000 exemption at the time of encashing the winning tickets. They deduct entire 30% +3% Cess from the winning amount. Whereas RWITC and DRC allow 10k exemption and TDS deducted from 90K only.

2. RWITC handover the TDS certificates to the punter within one month. At BTC there is no way you can get it even after 6 months. Still I am waiting for two TDS certificates. Every time the Tote Manager at the gate giving stupid excuses. WHY? IT Bangalore Circle is so lazy in issuing TDS certificates?

2. Imagine if anyone took multiple permutations and invested 1000 JP in a single ticket and won a Jackpot for 1 lakh, BTC consider Rs 10 as our investment. So they deduct Rs 10 from the Winning amount, ie. 100000 - 10 = 99990 and deduct full tax from the amount.

3. We have to wait several months for TDS Certificates and file the returns then only we get the refund? At RWITC and DRC the punters have no such hardship they get the exemption instantly. Is it not ridiculous to deduct TDS 33% from the EXEMPTED amount and we file returns to claim it after one year?

These way IT Bangalore and BTC working. So I dont see and relief for punters here after GST is introduced. They will twist the GST rules anyways to suit their benefit.

Very well explained Braganza.

Even if GST applies to Club Commission and not collections on Tote.It is time that we have a All India Tote.

This with the high GST will drive the bookies out of business and go a long way in curbing fixing ,which is a outcome of Owner/Jockey and Bookie connivance

One is simply shocked by clubbing Racing with Cinema entertainment,The facts.
In a movie hall a viewer paying 28% GST will get full money value ,some may crib about the movies still 70% satisfied.
In racing so many will be betting at 28 % GST to the bookmaker. A winner or A loser a win win scene for the govt.it gets Tax from all sources.

So now it is effectivley killing the golden goose which lays the golden eggs.The era of illegal bookies is on the horizan

@ All
In addition to what I have written, I would like to point out that I had, inadvertently, not mentioned entry No.29 of the GST Service Rates, which reads as under:

"29. Services provided by a race club by way of totalisator or a licensed bookmaker in such club;
28% With Full ITC".

Therefore, what is clear is that the Government has also distinguished between the entry fees charged by the race-clubs which is covered by entry No.28, and the same will be fully chargeable to GST @ 28%. On the other hand, at least as far as totalisator services is concerned, the value cannot be the entire tote collections because at the threshold itself the club cannot lay its claim on the entire amount and there is a mandate that the club will be entitled only to the commission it wants to retain and is obliged to return the balance amount to the punters. Therefore, service value cannot the the entire collection. The club will be acting only as a trustee for the said amount for a brief time and it is not the consideration received by the club.

However, coming to the book makers, it may be noted, at the cost of repetition, that the Club is providing a service to the bookmakers by giving them license to run the books and the bookmakers in turn provide the service of betting to the individual punters.

FOR WHY NOT MAKE IT SIMPLE BY STV

@ The Doc

You should not be blaming others when you started this game of playing superior. You had no reason to take my reference to the Martingale system out of context and patronizingly ‘teach’ me that it can’t be used by everybody. Courtesy and decorum begin at home!!!

Mr.Braganza well written and well explained. More like a Chartered Accountant. Turf Authorities should take your services to explain to the government if you have a point rather than travel on club expenses and enjoy the food and wine.

@ Braganza:

A very well written explanation. Hope you are right.

With respect to Bookies, their component so far was Betting Tax + Club Commission on every Card issued. So now it would translate to GST + Club Commission. Even if club commission is not applicable going forward, 28% is definitely applicable. Going by your explanation, how would the service value of Bookies operation be determined ?? One hell of a mess !!

Lets us see what clarifications come up before July 1st.

Well written Mr Braganza.
You have Taken much Pains to Elaborate GST on gambling.
I too agree on your take on GST.
Regards.

Exactly..there is nowhere mentioned that betting tax And gst are same..and also it clearly mentions the gst is on service not at source..totelized amount is not service infact providing totalizer is service hence the service to provide totalizers to punters is club commission..so it will be on commission..

The term used is on betting on horses and there is not an iota of doubt about it.

It is for each and every race club to see if to close down or carry on.

Racing is no where near as it Telecom insurance and now cinemas are cribbing.

These services are used by crores racing by just one lakh plus.

Soft ware industry today have over 50,000 sitting at home and here the racing officials are crying over few only losing their jobs.

Race clubs have short memory that thousands have been ruined by racing so they can just forget any sympathy from any one
There is no point in keep crying, live up to it survive or Vanquish.

Stop paying crores to derby race just make it an ordinary one. You have to cut corners some where.Stop freebees of members [specailly in RWITC]Make elections to clubs once in 3 yrs [you spend lakhs on electione every year WHY?

Like this many more methods but the will should be there

GST TO BE LEVIED ONLY ON THE VALUE OF SERVICE AND NOT ON THE ENTIRE TOTE COLLECTIONS

There appears to be a view that the GST @ 28% will be deducted out of the total tote collections. This is a totally wrong view.

As per Section 9(1) of the CGST Act, 2017 GST is to be levied on the value of supply of service alone [to simplify, I am not touching the “goods” portion of GST here]. Section 15 of the CGST Act provides for determination of the value of supply on which the GST is to be levied.

Section 15(1) of the Act is as under:

“15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.”

To keep the write-up very simple, I am not going into the detailed mechanism provided for arriving at the value. Suffice to understand that the value would be the amount to be given by the service recipient to the service provider for the services provided.

Entry No.28 of the SCHEDULE OF GST RATES FOR SERVICES AS APPROVED BY GST COUNCIL, provides for 28% GST on services provided by race-courses. The full entry No.28 is as under:

“28. Services by way of admission to entertainment events or access to amusement facilities including exhibition of cinematograph films, theme parks, water parks, joy rides, merry-go rounds, go-carting, casinos, race-course, ballet, any sporting event such as IPL and the like;”
There is another entry at Sl.No.30 which reads “Gambling” and attracts 28% GST.
To be noted further that there is no “compensation cess” on the 28% GST on the services provided by race courses, unlike in respect of certain other services. Therefore, GST is only 28% on the value of supply of service provided by the race-course.

What will be the value of service that a race-course provides to race-goers? First, the race-course charges the entrance ticket. This will be the first service provided by the race-course to all the entrants to the club’s premises. Therefore, this would certainly be a component of the value of service provided by the race-course.

The second stage comes when the race-goer avails the services provided by the race-course in the form of totalizator and/or the book-makers.

Assuming that the Government has categorized this part under “Gambling”.

Now, the crucial question here would be what is the value of service even in Gambling?

Taking up the totalizator first, let us assuming that the club decides to deduct 10% of the total collection towards its commission. Obviously, 90% of the amount collected is to be paid back to the successful punters. In other words, even though the entire amount collected is not returned to all the punters who had contributed to the kitty, yet the Club does not have any right over 90% of the collections and it ought to return the same to the successful punters. The Club is not charging the punters anything more than their stated commission. Therefore, the value of service provided by the Club to the punters could be only 10% of the tote collection and therefore only this 10% club commission can be the value of service provided by the Club to the punters. In other words, the Club ought to pay 28% tax on the 10% commission. Of course, it may be noted that the club will charge 28% on 10% also to the punters and pay it to the Government. Assuming total collection for a win pool is Rs.85000/-. If the club deducts 8500/-, this will be the value. 28% of Rs.8500/- will be Rs.2380/-. Therefore, what it would mean is that out of the total collection of Rs.85000/- the club will have to deduct Rs.10880/- (Rs.8500/- + Rs.2380/-), and distribute the remaining Rs.74,120/-. Therefore, this has to be compared with the present setup of taxation in the form of betting tax levied by the State Governments.

Coming to the bookmakers, there will be two steps in this case. The first one is the Club giving license to the bookmakers by charging a certain amount. This will be straight-away liable to 28% GST.

The bookmakers now will be the service providers to the individual punters who place bets with them. Therefore, the bookmakers will be liable to charge GST to punters and pay it to the Government. Here, again assuming that the betting by individual punters with the bookmakers is considered as gambling, then the same would be liable to 28% GST.

The most important difference between the tote betting and the betting with the bookmakers must be noted here. While the tote collections are bound to be distributed or paid back by the Club to the successful punters, and even if in a particular event there is no successful punter, still the club is bound to pay it back to the punters on a future date, the position with the bookmakers is not so. There may be successful punter or there may not. When a bookmaker accepts bets, there is no obligation on his part whatsoever to return a fixed percentage of the money to the punters and the entire profit or loss as the case may be, will be his own. Therefore, prima facie it appears that the value of supply by a bookmaker will be the entire betting amount collected by him and therefore, the whole amount will be liable to 28% GST.

It is true that there is a great anomaly in the system. However, the Government is still empowered to provide a via media in the form of prescribing a special valuation method under the GST Determination of Value of Supply Rules wherein certain categories of suppliers of goods and services have been prescribed a special dispensation. For instance, in the case of “value of supply of services in relation to purchase or sale of foreign currency, including money changing” the difference in the buying rate and selling rage is the value of service. Similarly for the services provided for booking of tickets for travel by air provided by an air travel agent, the value is 5% of the basic air fare. So also there is special provision for insurance and so on.

Therefore, in my view there should be no panic among the racing fraternity on account of introduction of GST.
Braganza